Merck's Gardasil not cleared for older women

NEW YORK (Reuters) - U.S. regulators have told Merck & Co they cannot yet approve Merck's application to expand marketing of its cervical cancer vaccine Gardasil to an older group of women, the drugmaker said on Wednesday.

Merck had applied for the use of Gardasil in women ages 27 through 45. The U.S. Food and Drug Administration said in a letter regarding the application that it has completed its review and there are "issues" that preclude approval within the expected review time frame, Merck said.

"It's hard to get a feel for if this is a dead issue or if this is delayed," said Linda Bannister, an analyst for Edward Jones. "At the minimum, it's going to be delayed."

Merck said it also failed to win FDA approval to expand Gardasil to protect against more strains of the Human Papillomavirus that causes cervical cancer. The company for now is dropping plans to pursue that expansion, a spokeswoman said.

Shares of the New Jersey-based drug maker, which also reiterated its long-term revenue and earnings targets, fell 0.8 percent.

Gardasil, approved in June 2006 for preventing cervical cancer and genital warts in females ages 9-26, has been one of Merck's most successful newer products and has helped the company recover after the 2004 withdrawal of its Vioxx arthritis treatment.

The Gardasil setbacks could raise concerns about the degree of growth that Merck can hope to achieve with the product, which is the world's first vaccine to prevent cervical cancer.

A Merck spokeswoman said the agency has specific questions regarding Gardasil's effectiveness in this older age group.

The company said it had already discussed the questions with the FDA and expects to respond to the agency in July.

"Once we go back to the FDA, we'll have a better sense of what the review timing looks like," spokeswoman Amy Rose said.

The agency's response on the application for the older group does not affect Gardasil's current approval for females ages 9 to 26, Merck said.

Global sales of Gardasil rose 7 percent in the first quarter to $390 million. Cowen and Co has predicted annual sales of the vaccine would reach $1.9 billion in 2008 and jump to $3 billion by 2012.

Edward Jones' Bannister said she had expected Gardasil sales to reach $2.6 billion by 2012, with about one-third to come from that older age group.

Deutsche Bank analyst Barbara Ryan said failure to win approval for the older age group could reduce her $3.8 billion estimate for 2012 sales by about $300 million.

Ryan said the most important new opportunity for the vaccine will be for its use in males. The vaccine could help prevent males from contracting Human Papillomavirus and spreading it to females through sexual contact. Merck is on track to seek approval for use in males by the end of the year, Rose said.

Gardasil has benefited from lengthy delays in approval of GlaxoSmithKline's rival Cervarix vaccine. The FDA in December issued a complete response letter for Cervarix, meaning it had completed its review of the product but had further questions about it.

Bannister said the Gardasil delay reflects broader challenges facing drug makers within the U.S. regulatory environment.

"It's not specific to Merck," Bannister said. "This is an industry-wide issue."

Merck shares fell 29 cents to $36.74 in afternoon trading on the New York Stock Exchange. The shares have fallen some 37 percent this year, hurt by setbacks to its cholesterol franchise.

(Additional reporting by Ransdell Pierson and Deepa Seetharaman, editing by Maureen Bavdek and Gerald E. McCormick)